The impact of the COVID-19 pandemic continues to be felt across multiple sectors with the lithium market — which was already affected by oversupply — now impacted by a fall in demand globally.

Asia Metals noted that China’s domestic battery grade lithium carbonate spot prices were at 46,500 yuan ($10,081.61) per tonne at the end of March, a quarterly decline of 6 per cent.

Lithium hydroxide pricing remained unchanged at 54,000 yuan per tonne.

Despite this negative sentiment, Australian lithium companies are still anticipating growth in the longer term, with Galaxy Resources (ASX:GXY) noting last month that China’s decision to extend electric vehicle (EV) subsidies for another two years is expected to support a recovery in sales.

Chinese EV sales fell by 56 per cent on a yearly basis during the March 2020 quarter.

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EV demand is also gaining traction in Europe where market share is rising steadily with major car companies such as Volvo, Volkswagen and BMW flagging big shifts towards EV models.

Earlier this month, Pilbara Minerals (ASX:PLS) pointed to the growing demand for battery storage, saying that the lower cost of systems was driving increased residential energy storage installations as well as larger-scale facilities.

Liontown Resources (ASX:LTR) is clearly gearing up for this brighter future with the company upgrading resources at its Kathleen Valley project in Western Australia to 156 million tonnes grading 1.4 per cent lithium oxide and 130 parts per million tantalum.

This is more than double the previous estimate of 74.9 million tonnes at 1.3 per cent lithium oxide and 140ppm tantalum.

Liontown says the new resource estimate will provide the foundation for an updated pre-feasibility study, which will also incorporate ongoing metallurgical test work results and mining studies designed to optimise and improve the planned development.

“This latest resource update clearly establishes Kathleen Valley as one of the world’s premier hardrock lithium deposits, with clear potential to underpin a long-life mining operation,” managing director David Richards said.